While the lottery remains a massive revenue stream for state governments and a meaningful traffic driver for convenience stores, it’s been facing a challenge at checkouts.

Around half of all U.S. adults report buying at least one lottery ticket per year, which amounted to $113 billion in sales last year, with 68% of that volume going through retail stores. But, according to Abacus, a British-run, Netherlands-based technology company, c-store operators are seeing a worrying correlation between self-checkout lanes and lottery sales. “Based on conversations with several major U.S. retailers,” said Mike Purcell, head of retail at Abacus, “adding self-checkout lanes in stores resulted in 10% to 40% drops in lottery sales. It’s making lottery less visible.”

The issue that convenience store owners face is simple: as customers increasingly gravitate toward self-checkout lanes and digital experiences, traditional lottery terminals—typically anchored at staffed counters—don’t seem very convenient. 

“Retail—and the c-store environment in particular—is changing,” said Simon Butler, CEO of Abacus. “We need lottery to respond to that change.”

The Winning Ticket

Rather than asking retailers or customers to alter their behavior, it’s time to flip the model: Bring the lottery to the systems that retailers are already using and where customers already are. 

“It’s about convenience, isn’t it?” said Paul Lawson, chief technology officer and chief security officer at Abacus. “It’s taking the lottery away from traditional lottery sale points, which is traditionally the only place that you can buy a lottery ticket, and putting it in front of all of your customers, across multiple touch points—whether that’s mobile or e-com or self-checkout lanes.”

That was the goal of a North American Association of State and Provincial Lotteries’ (NASPL) initiative almost 10 years ago, Lawson explained. “NASPL wanted to enable lottery integration at checkout lanes rather than dedicated customer service stations, so it set out to standardize retail integration via a common API so that large retailers like Circle K or Kroger could implement a single integration method across all U.S. jurisdictions.”

That’s where Abacus entered the picture. 

Abacus’s unique selling proposition, its proprietary application programming interface (API), had already been integrated directly into point-of-sale (POS) ecosystems throughout Holland. Could the same be done in the United States, where one-third of the planet’s lottery sales are sold? 

Yes, but it wasn’t easy, Lawson said. “I sat on six or seven different subcommittees, challenging the thinking on how lottery security works, on how lottery reporting works, on how an API would operate in the industry.”

A decade in the making, “Abacus can now effectively turn every cash register into a lottery terminal,” said Purcell. The result is a seamless checkout process—and much greater visibility for the lottery product. 

Seamless Integration Through One Gateway

But that seamless checkout isn’t possible without simplifying a notoriously complex lottery system.

That’s especially true for multistate operators. “A retailer working across all of [the 45 U.S. state lotteries] would potentially have to think about the connectivity to each of those separate individual lottery systems,” Butler said. And then there are the three central lottery providers, including IGT (now Brightstar Lottery), Scientific Games and Intralot.

Not to mention the POS software providers through whom the tech has to be integrated. 

What’s needed is one touchpoint; a transactional gateway, Butler said. “With one connection to Abacus, we facilitate all that interconnectivity with the state lotteries, the lottery providers and the POS systems.”

And reconciliation? Dramatically simplified with Abacus. “At the moment, retailers by regulation have to reconcile lottery as a separate transaction,” Lawson said. “By integrating into the same POS, they can reconcile lottery sales through the same back-office process as all other sales.”

But the benefits go beyond just access. “It makes it easier for the retailer to see those sales in real time, which they don’t see on a lottery terminal—and not just that one store, but all stores in a chain, whether it’s two or 1,000,” said Purcell. 

Perhaps the best part of Abacus is that retailers aren’t the ones paying for it.

With this technology, the state lotteries see a huge opportunity to increase sales, Purcell explained. So they pay a commission to Abacus, he said. “For the retailer, it’s effectively free.” The POS provider might charge a retailer to upgrade software during integration with the API, he continued, but Abacus advocates on retailers’ behalf when that happens.

Driving More Than Just Lottery Sales

While lottery typically isn’t a high-margin category for retailers, Butler recognizes that the opportunity is in what surrounds it. “Lottery is a driver to increase basket size,” he said. “Particularly when there are high jackpots, it encourages consumers to go into the store ... and while they’re buying a lottery ticket, they’re more likely to pick up something else.” 

It works the other way around too, Butler continued. “The ease of putting lottery sales in-lane means that customers are more likely to buy a ticket with their drinks and snacks, especially if you advertise it, than if you had to go to a traditional lottery sale point and go out of your way to do it.”

Having lottery sales in the mix can alleviate retailers’ transaction fees. “Lottery sales today are single purchases, with separate card transaction fees,” Butler pointed out. “But if lottery is sold with everything else the customer is buying, that fee is spread across the basket.” It also enables integration with promotions and loyalty programs that the category lacks today.

The Next Big Draw

In many cases, lottery isn’t top of mind for c-store decision-makers. “Look, you’re selling a million products. Lottery is only one of those—and it’s probably not a high-margin product either,” said Lawson. Often, it’s the retailers’ IT department heads that chomp at the bit to get this type of solution into their systems. “It’s about making lottery more accessible and improving the whole consumer experience, but they understand that it’s also giving the retailer a lot more control.”

Abacus is already active in over 50,000 retail lanes across Europe. Adoption in North America is expanding. “We just launched with Fairway in Iowa,” said Purcell, “and Harnois, a c-store company with 400 outlets in Canada, is piloting the technology today.” Other major U.S. players are preparing to deploy. “We have a major national brand that is about 90% complete,” Purcell shared. 

The technology also opens doors beyond the point of sale, Lawson said, with the vision of selling and redeeming tickets at ATMs, for example, or enabling e-commerce sales that manage to keep commissions in-store. “In states that allow it, a customer could buy age-gated digital games and digital scratch-off tickets at the register, through integration with the POS, that they could then play at home,” Purcell said. “The transaction happens in the store and the retailer gets that commission. They then come back into the store for validation redemption, and usually spend that amount in the store, too.”